Working Paper

The Impact of the 2017 Tax Cuts and Jobs Act on U.S. Multinationals’ Intangible Assets

Abstract: This paper investigates the impact of the 2017 Tax Cuts and Jobs Act (TCJA) on U.S. multinationals’ intangibles. We develop a theoretical model that incorporates key provisions of the TCJA—the Global Intangible Low-Taxed Income (GILTI) and the Foreign-Derived Intangible Income (FDII)—and derive testable implications for changes in licensing and patent transfer patterns. Using data on international royalty flows and patent assignments, we test the model’s predictions. Our findings suggest that the TCJA may have impacted profit shifting strategies through intangibles, aligning with our model’s predictions.

Keywords: profit-shifting; intangibles; patents; taxation;

JEL Classification: F12; O33; O41; O47;

https://doi.org/10.20955/wp.2024.020

Bibliographic Information

Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 2024-08

Number: 2024-020